-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OrPaVT6UY6ur+J8pDbn0S1ljgvL7bKIKl310og4YdR/ZuQO1sPMCwbR7HRe2kJRm kZwEbFbbMQx9MPXBH+3Hew== 0000832095-97-000007.txt : 19970815 0000832095-97-000007.hdr.sgml : 19970815 ACCESSION NUMBER: 0000832095-97-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KRUPP INSURED PLUS LTD PARTNERSHIP CENTRAL INDEX KEY: 0000786622 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] IRS NUMBER: 042915281 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15815 FILM NUMBER: 97661183 BUSINESS ADDRESS: STREET 1: 470 ATLANTIC AVE STREET 2: C/O BERKSHIRE REALTY AFFILIATES CITY: BOSTON STATE: MA ZIP: 02210 BUSINESS PHONE: 6174232233 MAIL ADDRESS: STREET 1: 470 ATLANTIC AVE CITY: BOSTON STATE: MA ZIP: 02210 FORMER COMPANY: FORMER CONFORMED NAME: KRUPP NATIONAL INSURED MARTGAGE FUND LTD PARTNERSHIP DATE OF NAME CHANGE: 19860702 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THEx SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-15815 Krupp Insured Plus Limited Partnership Massachusetts 04-2915281 (State or other jurisdiction of (IRS employer incorporation or organization) identification no.) 470 Atlantic Avenue, Boston, Massachusetts 02210 (Address of principal executive offices) (Zip Code) (617) 423-2233 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including those identified herein. KRUPP INSURED PLUS LIMITED PARTNERSHIP
BALANCE SHEETS ASSETS June 30, December 31, 1997 1996 Participating Insured Mortgages ("PIMs") $ 42,504,831 $ 42,745,790 (Note 2) Mortgage-Backed Securities and insured mortgage ("MBS") (Note 3) 26,353,493 27,147,213 Total mortgage investments 68,858,324 69,893,003 Cash and cash equivalents 2,292,217 1,757,197 Interest receivable and other assets 474,136 517,476 Prepaid acquisition fees and expenses, net of accumulated amortization of $3,262,418 and $4,196,787, respectively 548,192 832,838 Prepaid participation servicing fees, net of accumulated amortization of $595,975 and $802,641, respectively 214,871 273,009 Total assets $ 72,387,740 $ 73,273,523 LIABILITIES AND PARTNERS' EQUITY Liabilities $ 10,443 $ 18,468 Partners' equity (deficit): Limited Partners 71,578,984 72,448,679 (7,500,099 Limited Partner interests outstanding) General Partners (233,646) (194,008) Unrealized gain on MBS 1,031,959 1,000,384 Total Partners' equity 72,377,297 73,255,055 Total liabilities and Partners' equity $ 72,387,740 $ 73,273,523
-2- KRUPP INSURED PLUS LIMITED PARTNERSHIP
STATEMENTS OF INCOME For the Three Months For the Six Months Ended June 30, Ended June 30, 1997 1996 1997 1996 Revenues: Interest income - PIMs $ 805,709 $1,106,158 $1,604,668 $2,214,716 Interest income - MBS 549,766 582,702 1,100,607 1,173,796 Other interest income 29,910 27,017 54,926 57,948 Total revenues 1,385,385 1,715,877 2,760,201 3,446,460 Expenses: Asset management fee to an affiliate 126,990 161,367 253,461 323,869 Expense reimbursements to affiliates 20,130 22,993 36,467 50,745 Amortization of prepaid expenses and fees 154,600 239,626 342,784 479,251 General and administrative 38,485 20,328 85,880 47,433 Total expenses 340,205 444,314 718,592 901,298 Net income $1,045,180 $1,271,563 $2,041,609 $2,545,162 Allocation of net income (Note 4): Limited Partners $1,013,824 $1,233,416 $1,980,360 $2,468,807 Average net income per Limited Partner interest (7,500,099 Limited Partner interests outstanding) $ .13 $ .17 $ .26 $ .33 General Partners $ 31,356 $ 38,147 $ 61,249 $ 76,355
KRUPP INSURED PLUS LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 1997 1996 Operating activities: Net income $ 2,041,609 $ 2,545,162 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of prepaid expenses and fees 342,784 479,251 Changes in assets and liabilities: Decrease (increase) in interest receivable and other assets 43,340 (59,872) Decrease in liabilities (8,025) (6,602) Net cash provided by operating activities 2,419,708 2,957,939 Investing activities: Principal collections on PIMs 240,959 251,268 Principal collections on MBS 825,295 976,352 Net cash provided by investing activities 1,066,254 1,227,620 Financing activity: Quarterly distributions (2,950,942) (4,591,206) Net increase (decrease) in cash and cash equivalents 535,020 (405,647) Cash and cash equivalents, beginning of period 1,757,197 2,394,592 Cash and cash equivalents, end of period $ 2,292,217 $ 1,988,945
KRUPP INSURED PLUS LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS 1. Accounting Policies Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in this report on Form 10-Q pursuant to the Rules and Regulations of the Securities and Exchange Commission. However, in the opinion of the general partners, The Krupp Corporation and The Krupp Company Limited Partnership-IV (collectively the "General Partners"), of Krupp Insured Plus Limited Partnership (the "Partnership") the disclosures contained in this report are adequate to make the information presented not misleading. See Notes to Financial Statements included in the Partnership's Form 10-K for the year ended December 31, 1996 for additional information relevant to significant accounting policies followed by the Partnership. In the opinion of the General Partners of the Partnership, the accompanying unaudited financial statements reflect all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Partnership's financial position as of June 30, 1997, its results of operations for the three and six months ended June 30, 1997 and 1996 and its cash flows for the six months ended June 30, 1997 and 1996. The results of operations for the three and six months ended June 30, 1997 are not necessarily indicative of the results which may be expected for the full year. See Management's Discussion and Analysis of Financial Condition and Results of Operations included in this report. 2. PIMs At June 30, 1997, the Partnership's PIMs have a fair value of $42,760,970 and gross unrealized gains and losses of $586,208 and $330,069, respectively. The PIMs have maturities ranging from 2006 to 2033. 3. MBS At June 30, 1997, the Partnership's MBS portfolio has an amortized cost of $25,321,534 and gross unrealized gains of $1,031,959 with maturities from 2004 to 2033. 4. Changes in Partners' Equity A summary of changes in Partners' Equity for the six months ended June 30, 1997 is as follows: Total
Limited General Unrealized Partners' Partners Partners Gain Equity Balance at December 31, 1996 $ 72,448,679 $(194,008) $1,000,384 $ 73,255,055 Net income 1,980,360 61,249 - 2,041,609 Quarterly distributions (2,850,055) (100,887) - (2,950,942) Increase in unrealized gain on MBS - - 31,575 31,575 Balance at June 30, 1997 $ 71,578,984 $(233,646) $1,031,959 $72,377,297
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements including those concerning Management s expectations regarding the future financial performance and future events. These forward-looking statements involve significant risk and uncertainties, including those described herein. Actual results may differ materially from those anticipated by such forward-looking statements. Liquidity and Capital Resources The most significant demands on the Partnership's liquidity are regular quarterly distributions paid to investors of approximately $1.5 million. Funds used for investor distributions come from (i) nterest received on the PIMs, MBS, cash and cash equivalents, (ii) the principal collections received on the PIMs and MBS and (iii) cash reserves. The Partnership funds a portion of the distribution from principal collections causing the capital resources of the Partnership to continually decrease. As a result of this decrease, the total cash inflows to the Partnership will also decrease which will result in periodic downward adjustments to the quarterly distributions paid to investors. The General Partners periodically review the distribution rate to determine whether an adjustment is necessary based on projected future cash flows. In general, the General Partners try to set a distribution rate that provides for level quarterly distributions of cash available for distribution. To the extent quarterly distributions differ from cash available for distribution, the General Partners may adjust the distribution rate or distribute funds through a special distribution. On July 11, 1997, the owner of the Pine Hills Apartments notified the Partnership of its intent to payoff its PIM when the property is refinanced. Upon refinancing the Partnership will receive the outstanding principal of $4.6 million. The General Partners of the Partnership have required the owner to obtain an appraisal of the property to determine whether any SAI has been earned. The Partnership will distribute the capital transaction proceeds from this prepayment to investors through a special distribution. The General Partners will be reviewing the anticipated cash flows from the remaining investments to determine whether the current distribution rate will be sustainable or if an adjustment is necessary. -9- As an ongoing result of the Partnership s agreement to a modification of the Royal Palm PIM in December of 1995, the Partnership will receive interest only payments on the FNMA MBS at an interest rate of 6.5% in 1997. Thereafter interest rates will range from 7.0% to 8.775% per annum through maturity. Also, the Partnership received its pro-rata share of the principal payment totaling $250,000 paid in January. For the first five years of the PIMs the borrowers were prohibited from prepaying. For the second five years, the borrower can prepay the loan by incurring a prepayment penalty. The Partnership has the option to call certain PIMs by accelerating their maturity if the loans are not prepaid by the tenth year after permanent funding. The Partnership will determine the merits of exercising the call option for each PIM as economic conditions warrant. Such factors as the condition of the asset, local market conditions, interest rates and available financing will have an impact on this decision. Assessment of Credit Risk The Partnership's investments in mortgages are guaranteed or insured by the Federal National Mortgage Association ( FNMA ), the Government National Mortgage Association ("GNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC") or the United States Department of Housing and Urban Development ("HUD") and therefore the certainty of their cash flows and the risk of material loss of the amounts invested depends on the creditworthiness of these entities. FNMA is a federally chartered private corporation that guarantees obligations originated under its programs. FHLMC is a federally chartered corporation that guarantees obligations originated under its programs and is wholly-owned by the twelve Federal Home Loan Banks. These obligations are not guaranteed by the U.S. Government or the Federal Home Loan Bank Board. GNMA guarantees the full and timely payment of principal and basic interest on the securities it issues, which represents interest in pooled mortgages insured by HUD. Obligations insured by HUD, an agency of the U.S. Government, are backed by the full faith and credit of the U.S. Government. Operations The following discussion relates to the operations of the Partnership during the three and six months ended June 30, 1997 and 1996: Net income decreased during the three and six months ended June 30, 1997 as compared to the three and six months ended June 30, 1996 due primarily to lower interest income on PIMs and MBS. Interest income on PIMs and MBS will continue to decline as principal collections reduce the outstanding balance of the Partnership s portfolio. The Partnership funds a portion of distributions with MBS and PIM principal collections which reduces the invested assets generating income for the Partnership. -10- KRUPP INSURED PLUS LIMITED PARTNERSHIP PART II - OTHER INFORMATION Item 1. Legal Proceedings Response: None Item 2. Changes in Securities Response: None Item 3. Defaults upon Senior Securities Response: None Item 4. Submission of Matters to a Vote of Security Holders Response: None Item 5. Other Information Response: None Item 6. Exhibits and Reports on Form 8-K Response: None -11- SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Krupp Insured Plus Limited Partnership (Registrant) BY: /s/Robert A. Barrows Robert A. Barrows Vice President and Chief Mortgage Accounting Officer of The Krupp Corporation, a General Partner of the Registrant. DATE: August 5, 1997 -12- EX-27 2
5 The schedule contains summary financial information extracted from the balance sheet and statement of income and is qualified in its entirety by reference to such financial statements. 0000786622 KRUPP INSURED PLUS-I LIMITED PARTNERSHIP 6-MOS DEC-31-1997 JUN-30-1997 2,292,217 68,858,324 474,136 0 0 763,063 0 0 72,387,740 10,443 0 0 0 71,345,338 1,031,959 72,387,740 0 2,760,201 0 0 718,592 0 0 2,041,609 0 2,041,609 0 0 0 2,041,609 0 0 Includes participating Insured Mortgages (PIMs") of $42,504,831 and Mortgage-Backed Securities ("MBS") of $26,353,493. Includes prepaid acquisition fees and expenses of $3,810,610 net of accumulated amortization of $3,262,418 and prepaid participation servicing fees of $810,846 net of accumulated amortization of $595,975. Represents total equity of General Partners and Limited Partners. General Partners deficit of ($233,646) and Limited Partners equity of $71,578,984. Unrealized gain on MBS. Represents interest income on investments in mortgages and cash. Includes $342,784 of amortization of prepaid fees and expenses. Net income allocated $61,249 to the General Partners and $1,980,360 to the Limited Partners. Average net income per Limited Partner interest is $.26 on 7,500,099 Limited Partner interests outstanding.
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